House prices slow as sellers and buyers desert the market

Buyers and sellers have deserted the national property market amid the coronavirus pandemic, with new figures showing a modest slowdown in prices in Sydney and an outright drop in Melbourne.

CoreLogic on Friday reported house values in Sydney rose by 0.3 per cent through April, while in Melbourne they fell 0.4 per cent.

The performance was in stark performance to recent months, with both cities recording an average monthly growth rate of 1.7 per cent in the six months to March.

Values were up by 0.3 per cent in both Brisbane and Perth; the only other city to record a fall was Hobart, where they edged down 0.2 per cent.

Nationally, dwelling values were up 0.3 per cent, the smallest lift since June last year.

CoreLogic head of research Tim Lawless said there had been a clear step down in activity over recent weeks.

“Although housing values were generally slightly positive over the month, the trend has clearly weakened since mid-to-late March when social distancing policies were implemented and consumer sentiment started to plummet,” he said.

Social distancing rules have meant a closure of the traditional auction system, with some real estate agents conducting tours and sales online.

A big increase in the number of unemployed has resulted in hundreds of thousands of mortgage holders asking their banks to defer repayments.

CoreLogic estimates settled sales fell by 40 per cent in April as buyers retreated from the market and sellers stopped putting up their homes.

New listings are tracking 35 per cent lower than for the same time last year and 43 per cent below the five-year average.

Mr Lawless said the drop in properties for sale would help insulate the overall market from a sharp fall in values.

He said there were risks ahead, particularly for Sydney and Melbourne as both relied on strong population growth.

“Sydney and Melbourne arguably show a higher risk profile relative to other markets due to their large exposure to overseas migration as a source of housing demand, along with greater exposure to the downturn in foreign students, stretched housing affordability and already low rental yields are likely to reduce further on the back of rising vacancy rates and lower rents,” he said.

Within city markets, CoreLogic found higher value properties were feeling more of the squeeze.

It found values for Melbourne’s top quartile had fallen by 0.8 per cent through April. In Sydney, values in the top quartile rose 0.3 per cent compared to a 0.6 per cent lift for properties in the middle 50 per cent of the market.




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